What’s the best way to protect my innovation from being duplicated?

Is there a way to secure the rights to an innovative plastic card processing program (alternative to cash) targeting a specific target market? So that large banks and financial institutions (other than the one we potentially partner with) cannot duplicate?

ANSWER:

The first thing you can do is file a provisional patent. This is fairly easy to do and will cover you for one year. Within that year you will need to file one or more full patents based on the provisional patent. This is probably your best protection.

Another thing you may consider is trademarking the brand. If you can get to market quickly enough and gain consumer traction, the brand itself could be valuable and help defend your market share.

In addition, you should copyright everything associated with your innovative plastic card processing program. Copyrights are easy to obtain and actually provide some degree of protection.

That said, a competitor with enough resources can always find a way to work around your patents and copyrights, so your best defense of all is getting to market quickly, forming key strategic partnerships, and building your business and brand.

The fact is that most large banks and financial institutions are not very innovative and are slow moving, so you have the advantage of being a small startup. There’s always going to be some degree of risk, but if you execute well, the large banks and financial institutions are much more likely to partner with you than compete.

I hope this helps!

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Comments & Advice:

This is good advice. You should also be aware of trade secrets as a way of protecting yourself. Getting patent protection is expensive and can take a long time (although filing a provisional patent is relatively cheap and easy). It also involves publishing a lot of your “secret sauce” for the world to see. The basic bargain of patent protection is that you get a limited monopoly in exchange for letting everyone else in on the innovation.

By contrast, trade secret law protects anything that has value because it's secret, so long as you take reasonable steps to keep it secret. So you don't need to hire a patent lawyer or convince the federal government to grant you anything. Just innovate and keep it to yourself. On the downside, if the secret gets out, your protection is gone. So if someone can reverse engineer your innovations by observing how your cards work or by taking one apart, trade secret protection won't help much. On the other hand, if you have secret algorithms that you can store securely on your servers, so that the cards access the output but don't reveal the process, trade secret might be your best bet.

To keep your trade secrets secure, you need to put in place good formal security policies. At a minimum, all employees and anyone else with access to anything sensitive should sign a confidentiality agreement. That includes potential investors, so keep the secrets out of your “executive summaries,” public presentations and elevator pitches. Your policies should also include thoughtful, practical steps to restrict access. That might mean locking some drawers and cabinets, restricting who has access to certain files on your servers, encrypting disks and files, etc. What exactly makes sense in this regard depends entirely on what you're trying to keep secret, who has to use it, and how your business is organized. Finally, you need to actually carry out your policies. So stick to what's practical. A paper policy you never follow will be worse than no policy at all, since it will highlight what you could have done, but didn't.

I hope that helps. The best advice is still the suggestion above that you get to market fast with a good product and a strong brand and build a large base of partners and users. It's not Google's patents or trade secrets that make it hard for Bing and Yahoo! to compete.